Published: 15/03/2022 By Hannah McCormack
As we know a creditors' voluntary liquidation shortened to "CVL", is the liquidation process used to wind up a company using its assets to pay off its remaining debts; but what actually happens when you instruct turpin barker armstrong to place your company into CVL?Here is our step by step guide on what happens when we assist the directors at each stage, this includes how we assist in drafting the legal notices, minutes and other necessary documents in order to place the company into a CVL as mentioned in the steps below:
Board meeting – A meeting of the Board of Directors will approve the issue of notices convening the shareholders (members’) meeting, which is required to place the Company into CVL. Someone will be nominated to convene the decision procedure for creditors to appoint Liquidators and state which Directors are to verify a statement of affairs on behalf of the Company by completing a statement of truth.
Notices – Notices must be issued to members and creditors within specific timescales convening a meeting of members to wind up the Company voluntarily and appoint Liquidators. Also, to convene a decision procedure where creditors appoint Liquidators and authorise the payment of any outstanding pre-liquidation fees from the assets of the Company. We will then send notices to all creditors on the same business day.
Statement of Affairs - The Directors nominated at the board meeting are required to prepare a statement of affairs on behalf of the Company - we will assist you in preparing a draft statement of affairs, but it remains the Board’s statement, and those who verify the accuracy of its contents that will ultimately be responsible for any false disclosure or omission. The Statement of Affairs must be provided without delay as it needs to be sent to the creditors. It is the responsibility of the Directors to appoint Liquidators, to ensure that the statutory timescales are adhered to, as failure to do so is an offence under the insolvency legislation that could lead to a fine.
The statement of affairs sent to creditors will include personal data in the form of the names and addresses of individual creditors, together with the amounts owed to them.
The Director nominated to convene the decision procedure to appoint Liquidators, will also be required to provide additional explanatory information in support of the statement of affairs, which will be sent to the creditors. Although we will assist in preparing the explanatory information, it remains your responsibility as Directors to ensure that it is accurate. In addition, where a meeting of creditors is held the nominated Chair may have to answer questions raised by creditors in response to any disclosure made in it.
Company meeting - A general meeting of the Company will be convened at which members will be required to pass a resolution placing the Company into voluntary liquidation and appointing a Liquidator.
Decision by the creditors - After the Company meeting the creditors have the opportunity to nominate Liquidators in place of the Liquidators appointed by the members, appoint a Committee to assist the Liquidator, and in the absence of a Committee, approve any pre-liquidation fees not already paid, where they are to be paid from asset realisations in the liquidation.
If the creditors require a meeting/virtual meeting to nominate a Liquidator one of the Directors will need to act as Chair.
Post-appointment notices - After the appointment of the Liquidators, the Liquidators are required to issue and advertise a variety of notices for the attention of the Registrar of Companies, the Secretary of State, other statutory bodies such as HM Revenue and Customs and the members and creditors generally.
Fee approval - After appointment the Liquidators will need to seek approval for the basis of their fees which will be approved by the Committee if one is appointed. If no Committee is appointed, then the Liquidators will seek approval from the creditors.
Company Directors’ Disqualification Act - Within the first three months following the appointment, the Liquidators are required to complete a confidential online report to the Secretary of State on the conduct of those who have been directors, or shadow directors, of the Company in the last 3 years.
All this may sound complicated but we are there every step of the way to guide you through the process in placing your company into creditors voluntary liquidation.